Strategic Analysis and Growth Investment Recommendations: Bega Cheese

This report provides a strategic analysis of Bega Cheese, focusing on its current strategies, the feasibility of investing $34 million in a new lactoferrin plant, and recommendations for future growth. The analysis highlights Bega Cheese's focus on increasing market share and profit margins through rationalization, innovation, and strategic agreements. The investment in the lactoferrin plant is deemed feasible due to the growing global demand for lactoferrin's health benefits and Bega Cheese's strong market position. Additional growth recommendations include reducing environmental impact, investing in sustainable milk supply, and focusing on pediatric nutrition products. The report concludes that these strategies will support Bega Cheese's continued growth and competitiveness in the dairy industry. Desklib provides access to similar solved assignments and resources for students.

Running head: STRATEGIC ANALYSIS RECOMMENDATIONS ON BEGA CHEESE
Strategic Analysis Recommendations on Bega Cheese
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1STRATEGIC ANALYSIS RECOMMENDATIONS ON BEGA CHEESE
Table of Contents
Introduction..........................................................................................................................2
Analysis of Current Strategy of Bega Cheese.....................................................................2
Strategic Decision Analysis.................................................................................................4
Growth Recommendations..................................................................................................5
Conclusion...........................................................................................................................6
References............................................................................................................................8

2STRATEGIC ANALYSIS RECOMMENDATIONS ON BEGA CHEESE
Introduction
Bega cheese limited’s business operation is involved in receiving, processing,
manufacturing along with distributing dairy and related products. The segments of the company
include Bega Cheese and Tatura Milk. The company is renowned among its Australian
consumers through its promotional theme of producing natural milk products and competing
with other brands such as Coon, Kraft and Mainland (Bega Cheese, 2019). The company is
headquartered in Bega Valley that is a milk processor and the global distributor of the range of
dairy products. The objective of the paper is to analyze the current strategy of Bega Cheese and
to evaluate whether making investment of $34 million will be feasible for establishing a new
lactoferrin plant. Moreover, additional recommendations will be provided based on the current
strategic position of the company that can support the growth of the company over the span of
future three years.
Analysis of Current Strategy of Bega Cheese
From analysis of the annual report of Bega Cheese it has been gathered that the
company’s current strategy is focused on increasing the market share along with profit margins
(Wang, 2017). To attain increased predict margins and competitive edge the company has
developed strategy to undergo rationalization along with consolidation of dairy farming and milk
processing. Moreover, the current strategy of Bega Cheese is to invest on innovation and is
focused to remain on technical forefront within its production process (Blagrove, Hundloe &
Ditton, 2016). Following such strategy to remain technologically competent, Bega Cheese is
making continuous improvements and making investments which improve the operational
efficiency. All five of its manufacturing plants operate with having advanced technologies to

3STRATEGIC ANALYSIS RECOMMENDATIONS ON BEGA CHEESE
make sure high productivity in commitment to environmental management and sustainability
(Harman, Cunningham, Jacobs, Measham & Cvitanovic, 2015).
Another current strategy of Bega Cheese turned out to be successful in increasing its
strategic growth with entering into a new agreement with Fonterra Brands in Australia this
strategic decision ensured that the company produces and supplies retail cheese to Fonterra under
“Bega” along with other brand names to market (Kieser, 2018). This strategy offered the dairy
company with strategic advantages to concentrate its business totally on cutting, packaging and
processing bulk cheese within retail ready products as Fonterra took the responsibility to deal
with retailers. This strategy also have set out a modified cost and pricing formula based on which
the company attained royalty based on Australian retail sales.
The sustainability strategy of Bega Cheese is centered on managing its processing plants
in order to help suppliers to improve their management practices by means of “Bega
Environmental Management System” that has the strategy aspect of securing milk supply
(Lindberg, Nichols & Yam, 2017). The current strategy of the dairy company is to introduce new
product lines. In this strategy the company has concentrated on developing new products
including cheese bars, cheese snacking along with bio-nutrients. With introducing new product
divisions, Bega Cheese is focused on penetrating new market with increased share in the dairy
industry of Australia and ensuring increasing growth in its business (Yayeh, Kassa & Dagnew,
2017). This strategy will support Bega Cheese in attracting more consumer base in Australia and
it is also found that consumers have hanging taste and preferences in certain periods and
considering same, increased product diversification is required for the food items offered by the
company (Meurer, Palmer & Gras, 2015).

4STRATEGIC ANALYSIS RECOMMENDATIONS ON BEGA CHEESE
Strategic Decision Analysis
Bega Cheese has made a decision to make an investment of $ 34 million on the new
lactoferrin plant. Under this strategic decision planned by the company, Bega Cheese is
anticipated to produce 35 tons of lactoferrin extract on yearly basis that is supposed to be valued
by its target consumers because of its anti-microbial, anti-inflammatory and immunological
properties (Deeth & Bansal, 2018). Based on the strategic analysis carried out above, it can be
stated that such investment is observed to be feasible relied on its efficient strategic position. Due
to the functional characteristics of the lactoferrin extraction decision made by the company, its
functional characteristics is anticipated to make the new offering to be globally popular in a
range of consumer health and nutritional health products (Pathak, Hagare, Guo & Ngo, 2015).
Based on the analysis of its current strategic position and success of its recently
implemented business growth strategies, it is also estimated that investment decision in the
Lactoferrin plant will be feasible in attaining business success globally along with attaining
exceptional growth in its bio-nutrients business (Dix & Wright, 2018). This strategic decision
will be profitable for ensuring the company’s growth over the three years span as the current
position of the Bega Cheese within the Australian dairy industry is also strengthened through its
private level contract with Coles. Such growth in its strategic decisions previously has facilitated
the company in attaining growth in its market share and profit margin that can support business
expansion investments of the company. Moreover, getting up Lactoferrin plant can be profitable
for Bega Cheese as the emerging market economies are increasing growth all through the world
regarding dairy products demand with local supplies (Esty, 2017). Dropping milk production
within south and international commodity price volatility has driven the manufacturers like Bega
Cheese to attain stable domestic along with high value export market opportunities.

5STRATEGIC ANALYSIS RECOMMENDATIONS ON BEGA CHEESE
Growth Recommendations
The purpose of the growth recommendations for Bega cheese will be relied on the
increased plant utilization, continued product development, innovation and taking advantage of
anticipated industry rationalization. Such growth recommendations will be made on the proposed
capital rising of $ 34 million for decreasing debt and recognizing new growth opportunities.
Based on the strategic decisions made by Bega Cheese to invest within new lactoferrin plant
certain additional growth recommendations are provided to the dairy company those can be
considered over the coming three years to attain strategic growth. These business growth
recommendations in support of the investment are indicated below:
 In setting up a Lactoferrin Plant, Bega Cheese has to undertake major investments to
decrease the environmental impacts those might be required to take further action. Being
a huge emitter of carbon it is required to seek newer ways to decrease such emissions.
The business operations of Bega Cheese must be strategically linked with the distribution
network of the company. The cooperation along with effective communication among the
suppliers and distributors are necessary to be done in a proper manner in order to
maintain sustainability in corporate relationships among them. The current strategy of
Bega Cheese is to invest on innovation and is focused to remain on technical forefront
within its production process. Following such strategy to remain technologically
competent, Bega Cheese must make continuous improvements and investments which
can improve the operational efficiency. All five of its manufacturing plants must continue
to operate with having advanced technologies to make sure high productivity in
commitment to environmental management and sustainability.

6STRATEGIC ANALYSIS RECOMMENDATIONS ON BEGA CHEESE
 Bega Cheese is recommended to make increased investments in the business initiatives
those can promote growth along with sustainability in the milk supply. This strategy can
strongly link the needs of the dairy company with its suppliers. Moreover, in support to
the proposed strategic investment decision, it is recommended to the company to
implement new approaches those can encourage the existing suppliers to invest and
sustainably increase their milk supply in order to attain longer time supply security that
can facilitate long term business growth opportunities to be addressed. Bega Cheese is
also recommended to make initiatives in maintaining longer term supply agreements
between the company along with its suppliers and production systems that will be aligned
with the consumers requirements along with an increasing milk pool. This can facilitate
the dairy company in responding to the demands of the ongoing global consumers.
 The company is recommended to focus on attaining competitive advantages in pediatric
and child nutrition dairy products over the upcoming three years through setting up the
lactoferrin plant. In implementing strategic business growth recommendation, Bega
Cheese must optimize the value created from the existing milk components those are
supplied to the organization in attaining active growth in its overall milk processing
volumes. Such strategy implementation can facilitate the dairy company in attaining
growth through market penetration opportunities in the Asian region. Automation of
activities in the new plant can serve as effective growth opportunity that can bring
consistency to the quality of the company’s products.
Conclusion
The objective of the paper was to analyze the current strategy of Bega Cheese and to
evaluate whether making investment of $34 million will be feasible for establishing a new

7STRATEGIC ANALYSIS RECOMMENDATIONS ON BEGA CHEESE
lactoferrin plant. It was gathered from the paper that the company’s current strategy is focused
on increasing the market share along with profit margins. Focusing on same, its current strategic
position and success of its recently implemented business growth strategies, it is also estimated
that investment decision in the Lactoferrin plant will be feasible in attaining business success
globally along with attaining exceptional growth in its bio-nutrients business. The company is
recommended to focus on attaining competitive advantages in pediatric and child nutrition dairy
products over the upcoming three years through setting up the lactoferrin plant.

8STRATEGIC ANALYSIS RECOMMENDATIONS ON BEGA CHEESE
References
Bega Cheese., (2019). Retrieved from
http://www.annualreports.com/HostedData/AnnualReports/PDF/ASX_BGA_2017.pdf.
Blagrove, S., Hundloe, T., & Ditton, H. (Eds.). (2016). Australia's Role in Feeding the World:
The Future of Australian Agriculture. CSIRO PUBLISHING.
Deeth, H. C., & Bansal, N. (Eds.). (2018). Whey Proteins: From Milk to Medicine. Academic
Press.
Dix, C., & Wright, O. (2018). Bioavailability of a Novel Form of Microencapsulated Bovine
Lactoferrin and Its Effect on Inflammatory Markers and the Gut Microbiome: A Pilot
Study. Nutrients, 10(8), 1115.
Esty, B. (2017). Bega Cheese: Bidding to Bring Vegemite Back Home. HBS Finance Case, 218-
001.
Harman, B., Cunningham, R., Jacobs, B., Measham, T., & Cvitanovic, C. (2015). Engaging local
communities in climate adaptation: a social network perspective from Bega Valley, New
South Wales, Australia.
Kieser, D. (2018). Synthetic foods and their impact on your portfolio. Equity, 32(7), 4.
Lindberg, R., Nichols, T., & Yam, C. (2017). The healthy eating agenda in Australia. Is salt a
priority for manufacturers?. Nutrients, 9(8), 881.
Meurer, B., Palmer, M., & Gras, S. (2015). Innovation hub fuels growth of Australia's dairy
industry. Food Australia, 67(4), 42.

9STRATEGIC ANALYSIS RECOMMENDATIONS ON BEGA CHEESE
Pathak, N., Hagare, P., Guo, W., & Ngo, H. H. (2015). Australian food processing industry and
environmental aspect–a review. In International conference on biological civil and
engineering (BCEE-2015) Feb (pp. 3-4).
Wang, B. (2017). Lactoferrin: structure, function, thermal denaturation and digestion.
Yayeh, Z., Kassa, A., & Dagnew, E. (2017). Milk Production, Marketing and Processing
Practices of Dairy Cattle in Debremarkos Woreda of East Gojjam Zone, Amhara
Regional State. J Nutr Food Sci, 7(607), 2.